CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 12-1 Capital Stock Transactions

CENTURY 21 ACCOUNTING © Thomson/South-Western Capital Stock Transactions As a corporation grows, it may require additional capital to finance its expansion Articles of incorporation are usually written to permit a corporation to issue more shares of stock than it sold to initial investors The corporation may issue stock: At par value Above par value Below par value For assets other than cash 2 LESSON 12-1

CENTURY 21 ACCOUNTING © Thomson/South-Western 3 LESSON 12-1 Number of Shares Par Value per Share = Total Par Value × 1.Calculate the amounts to be recorded. 2.Write the date. 6.Record the credit amount. 5.Write the debit amount. 3.Enter the account title. 4.Record the receipt number. ISSUING PREFERRED STOCK AT PAR VALUE page $100.00=$80, ×6 March 1: Received cash from Brenda Henson for 800 shares of $100 par value preferred stock at $100 per share, $80, Receipt No. 117.

CENTURY 21 ACCOUNTING © Thomson/South-Western 4 LESSON 12-1 Number of Shares Value per Share =Value × 4.Record the receipt number. ISSUING PREFERRED STOCK FOR MORE THAN PAR VALUE page Calculate the amounts to be recorded. 2.Write the date. 6.Record the credit amounts. 5.Write the debit amount. 3.Enter the account titles $120.00=$36, × Total received = 30, × Par value $ 6,000.00Amount received in excess of par value April 6: Received cash from Adam Kellogg for 300 shares of $ par value preferred stock at $120 per share, $36,000. Receipt No. 127.

CENTURY 21 ACCOUNTING © Thomson/South-Western 5 LESSON 12-1 Number of Shares Value per Share =Value × 4.Record the receipt number. 1.Calculate the amounts to be recorded. 2.Write the date. 6.Record the credit amount. 5.Write the debit amounts. 3.Enter the account titles page $100.00=$50, × Par value = 45, × Total received $ 5,000.00Total discount 5 ISSUING PREFERRED STOCK FOR LESS THAN PAR VALUE Aug. 9: Received cash from Hazel Deloach for 500 shares of $100 par value preferred at $90 per share, $45,000. Receipt No. 173.

CENTURY 21 ACCOUNTING © Thomson/South-Western 6 LESSON 12-1 ISSUING PREFERRED STOCK FOR ASSETS OTHER THAN CASH page 346 Number of Shares Value per Share =Value × 4.Record memorandum number.1.Calculate the amounts to record. 2.Write the date. 6.Record the credit amount. 5.Write the debit amount. 3.Enter the account titles $120.00=$12, × Total received = 10, × Par value $ 2,000.00Amount received in excess of par value5 October 7: Received office equipment from Steven McBee at an agreed value of $12,000 for 100 shares of $100 par value preferred stock. Memo 246

CENTURY 21 ACCOUNTING © Thomson/South-Western 7 LESSON 12-1 ISSUING COMMON STOCK WITH NO PAR VALUE page 347  Common stock often has no par value assigned to it or printed on the stock certificates  With no-par value stock, the entire amount paid by an investor is recorded in the capital stock account July 8: Received cash from Elizabeth Griffin for 1,000 shares of no-par value common stock at $14 per share, $14,000. receipt 148.

CENTURY 21 ACCOUNTING © Thomson/South-Western 8 LESSON 12-1 ISSUING COMMON STOCK WITH A STATED VALUE page 347  Corporations may assign a value to no-par value common stock  A stated value to no-par value shares serves the same function as par value  No-Par value common stock with a stated value is recorded using the same procedures as par value stock.  It may be issued at, above, or below stated value October 10: Received cash from Alice Blake for 100 shares of $10 stated value common stock at $12 per share, $1,200. Receipt 181.

CENTURY 21 ACCOUNTING © Thomson/South-Western 9 LESSON 12-1 TERM REVIEW discount on capital stock page 348